2. Christopher construction, Inc. has current assets of $20,000and current liabilities of $10,000. If we assume that eachtransaction is independent, what is the effect of each of thefollowing transaction on Christopher Construction Inc.âs currentratio? Compute the current ratio for each case. a) $2000 ofaccounts payable are paid off with cash. b) Inventories of $5000are purchased on credit. c) Additional common stock is sold for$4000 cash. d) A long-term debt of $2,000 is obtained, and theproceeds are used to buy a new machine. e) Account receivable of$1,000 are collected in cash. 2. Christopher construction, Inc. hascurrent assets of $20,000 and current liabilities of $10,000. If weassume that each transaction is independent, what is the effect ofeach of the following transaction on Christopher ConstructionInc.âs current ratio? Compute the current ratio for each case. a)$2000 of accounts payable are paid off with cash. b) Inventories of$5000 are purchased on credit. c) Additional common stock is soldfor $4000 cash. d) A long-term debt of $2,000 is obtained, and theproceeds are used to buy a new machine. e) Account receivable of$1,000 are collected in cash. 2. Christopher construction, Inc. hascurrent assets of $20,000 and current liabilities of $10,000. If weassume that each transaction is independent, what is the effect ofeach of the following transaction on Christopher ConstructionInc.âs current ratio? Compute the current ratio for each case. a)$2000 of accounts payable are paid off with cash. b) Inventories of$5000 are purchased on credit. c) Additional common stock is soldfor $4000 cash. d) A long-term debt of $2,000 is obtained, and theproceeds are used to buy a new machine. e) Account receivable of$1,000 are collected in cash.
2. Christopher construction, Inc. has current assets of $20,000and current liabilities of $10,000. If we assume that eachtransaction is independent, what is the effect of each of thefollowing transaction on Christopher Construction Inc.âs currentratio? Compute the current ratio for each case. a) $2000 ofaccounts payable are paid off with cash. b) Inventories of $5000are purchased on credit. c) Additional common stock is sold for$4000 cash. d) A long-term debt of $2,000 is obtained, and theproceeds are used to buy a new machine. e) Account receivable of$1,000 are collected in cash. 2. Christopher construction, Inc. hascurrent assets of $20,000 and current liabilities of $10,000. If weassume that each transaction is independent, what is the effect ofeach of the following transaction on Christopher ConstructionInc.âs current ratio? Compute the current ratio for each case. a)$2000 of accounts payable are paid off with cash. b) Inventories of$5000 are purchased on credit. c) Additional common stock is soldfor $4000 cash. d) A long-term debt of $2,000 is obtained, and theproceeds are used to buy a new machine. e) Account receivable of$1,000 are collected in cash. 2. Christopher construction, Inc. hascurrent assets of $20,000 and current liabilities of $10,000. If weassume that each transaction is independent, what is the effect ofeach of the following transaction on Christopher ConstructionInc.âs current ratio? Compute the current ratio for each case. a)$2000 of accounts payable are paid off with cash. b) Inventories of$5000 are purchased on credit. c) Additional common stock is soldfor $4000 cash. d) A long-term debt of $2,000 is obtained, and theproceeds are used to buy a new machine. e) Account receivable of$1,000 are collected in cash.
Related questions
Total Current Asset Current Ratio Effect on Net Income
| a | Cash is acquired through issuance of additional common stock | ____ | ____ | ____ | |||||
| b | Merchandise is sold for cash | ____ | ____ | ____ | |||||
| c | Federal income tax due for the previous year is paid | ____ | ____ | ____ | |||||
| d | A fixed asset is sold for less than book value | ____ | ____ | ____ | |||||
| e | A fixed asset is sold for more than book value | ____ | ____ | ____ | |||||
| f | Merchandise is sold on credit | ____ | ____ | ____ | |||||
| g | Payment is made to trade creditors for previous purchases | ____ | ____ | ____ | |||||
| h | A cash dividend is declared and paid | ____ | ____ | ____ | |||||
| I | Cash is obtained through short- term bank loans | ____ | ____ | ____ | |||||
| J | Short- term notes receivable are sold at a discount | ____ | ____ | ____ | |||||
| k | Marketable securities are sold below cost | ____ | ____ | ____ | |||||
| L | Advances are made to employees | ____ | ____ | ____ | |||||
| m | Current operating expenses are paid | ____ | ____ | ____ | |||||
| n | Short- term promissory notes are issued to trade creditors in exchange for past due accounts payable | ____ | ____ | ____ | |||||
| o | 10- year notes are issued to pay off accounts payable | ____ | ____ | ____ | |||||
| p | A fully depreciated asset is retired | ____ | ____ | ____ | |||||
4 DEBT RATIO- Bartley Barstools has an equity multiplier of 2.4, and its assets are financed with some combination of long-term debt and common equity. What is its equity ratio? What is its debt ratio?
6 MARKET/BOOK RATIO- Jaster Jets has $10 billion in total assets. Its balance sheet shows $1 billion in current liabilities, $3 billion in long-term debt and $6 billion in common equity. It has 800 million shares of common stock outstanding, and its stock price is $32 per share. What is Jaster
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Question: Page 7 9B16B008 EXHIBIT 3: AMERICAN APPARELINC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET, 200...
Page 7 9B16B008
EXHIBIT 3: AMERICAN APPAREL INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEET, 2008â2013
December 31, | ||||||
(Amounts and shares in thousands, except per share amounts) | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 |
ASSETS | ||||||
CURRENT ASSETS | ||||||
Cash | $ 8,676 | $ 12,853 | $ 10,293 | $ 7,656 | $ 9,046 | $ 11,368 |
Trade accounts receivable | 20,701 | 22,962 | 20,939 | 16,688 | 16,907 | 16,439 |
Restricted cash | - | 3,733 | ||||
Prepaid expenses and other current assets | 15,636 | 9,589 | 7,631 | 9,401 | 9,994 | 5,369 |
Inventories, net | 169,378 | 174,229 | 185,764 | 178,052 | 141,235 | 148,154 |
Income taxes receivable and prepaid income taxes | 306 | 530 | 5,955 | 4,114 | 4,494 | 604 |
Deferred income taxes, net of valuation allowance | 599 | 494 | 148 | 626 | 4,627 | 3,935 |
Total current assets | 215,296 | 224,390 | 230,730 | 216,537 | 186,303 | 185,869 |
Property and equipment, net | 69,303 | 67,778 | 67,438 | 85,400 | 103,310 | 112,408 |
Deffered taxes | 2,426 | 1,261 | 1,529 | 1,695 | 12,033 | 10,137 |
Other assets, net | 46,727 | 34,783 | 25,024 | 24,318 | 25,933 | 25,195 |
TOTAL ASSETS | $ 333,752 | $ 328,212 | $ 324,721 | $ 327,950 | $ 327,579 | $ 333,609 |
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | ||||||
CURRENT LIABILITIES | ||||||
Cash overdraft | $ 3,993 | $- | $ 1,921 | $ 3,328 | $ 3,741 | $ 2,413 |
Revolving credit facilities and current portion of long-term | ||||||
debt | 44,042 | 60,556 | 50,375 | 138,478 | 6,346 | 34,318 |
Accounts payable | 38,290 | 38,160 | 33,920 | 31,534 | 19,705 | 32,731 |
Accrued expenses and other current liabilities | 50,018 | 41,516 | 43,725 | 39,028 | 30,573 | 22,140 |
Fair value of warrant liability | 20,954 | 17,241 | 9,633 | 993 | 2,608 | 8,582 |
Income taxes payable | 1,742 | 2,137 | 2,445 | 230 | ||
Deferred income tax liability, current | 1,241 | 296 | 150 | - | ||
Current portion of capital lease obligations | 1,709 | 1,703 | 1,181 | 560 | 1,907 | 2,616 |
Total current liabilities | 161,989 | 161,609 | 143,350 | 214,151 | 64,880 | 102,800 |
LONG-TERM DEBT, net of unamortized discount of $5,779 and | ||||||
$27,929 at December 31, 2013 and 2012, respectively | 213,468 | 110,012 | 97,142 | 444 | ||
Subordinated notes payble to related party | 5,453 | 2,844 | - | 4,611 | 65,997 | 67,050 |
Capital lease obligations, net of current portion | 1,726 | 542 | 4,355 | 3,292 | ||
Deferred tax liability | 536 | 262 | 96 | 260 | 1,020 | 1,986 |
Deferred rent, net of current portion | 18,225 | 20,706 | 22,231 | 24,924 | 22,052 | 16,011 |
Other long-term liabilities | 11,485 | 10,695 | 12,046 | 7,994 | 11,934 | 6,058 |
Total Long -Term Liabilites | 249,167 | 144,519 | 133,241 | 38,775 | 105,358 | 94,397 |
TOTAL LIABILITIES | 411,156 | 306,128 | 276,591 | 252,926 | $ 170,238 | $ 197,197 |
STOCKHOLDERS' (DEFICIT) EQUITY | ||||||
Shares outstanding at December 31, 2012 | 11 | 11 | 11 | 8 | 7 | 7 |
Additional paid-in capital | 185,472 | 177,081 | 166,486 | 153,881 | 150,449 | 131,252 |
Accumulated other comprehensive loss | (4,306) | (2,725) | (3,356) | (3,168) | (2,083) | (2,703) |
Accumulated deficit | (256,424) | (150,126) | (112,854) | (73,540) | 19,012 | 17,900 |
Less: Treasury stock, 304 shares at cost | (2,157) | (2,157) | (2,157) | (2,157) | (10,044) | (10,044) |
TOTAL STOCKHOLDERS' (DEFICIT) EQUITY | (77,404) | 22,084 | 48,130 | 75,024 | 157,341 | 136,412 |
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY | $ 333,752 | $ 328,212 | $ 324,721 | $ 327,950 | $ 327,579 | $ 333,609 |
1. Fill in the table below with information from the financialstatements provided in your chosen companyâs case study. Calculatethe % change between the current year and previous year for eachitem. Remember to correctly identify the currency for your casestudy.
Most Current Year | % Chg (+/â) | Previous Year | |
Current Assets | |||
Total Assets | |||
Current Liabilities | |||
Total Debt | |||
Sales/Revenue | |||
Cost of Goods Sold | |||
Inventory | |||
Net Income/Loss |
2. From the information in the table above, identify which lineitems are increasing with a plus sign and which are decreasing witha minus sign. Evaluate whether the change from the previous year isgood or bad for the companyâs performance and explain why
- 3. Use the information in the table above to calculate thefollowing financial ratios. Explain what the result of each ratiosays about your chosen companyâs financial health.
- Current Ratio
- Debt to Asset Ratio (Debt Ratio)
- Inventory Turnover
- Return on Sales (Profit Margin)
